How did the COVID-19 pandemic affect tourism in Latin America?

Epidemics are long-lasting disasters, they can last for years. They occur in cities, since only crowds of human beings allow the contagion rates that are a necessary precondition for a disease to become a disaster. Popular markets and mass transportation systems are examples of urban life that could make the spread of a virus possible. Since an epidemic can last for years, it is likely that several waves will occur in that period (ECLAC, 2020).

COVID-19 spread to five continents in three months. For Latin America and the Caribbean, the first outbreak occurred at the end of February 2020, prompting governments in the region to take measures to contain the virus, especially on March 11, 2020. When the World Health Organization (WHO) announced the spread of the new coronavirus as a pandemic, government mitigation measures focused on border closures, banning public events, total or partial isolation, lockdown, and social distancing. However, these decisions to reduce infection rates and prevent a collapse of the health system paralyzed economic activity at all levels.

The mobility restrictions and containment measures adopted against the virus have had profound impacts on economic activity around the world. One of the most notorious effects is the almost total paralysis of international passenger flows of all kinds, which has particularly affected the global tourism industry. The tourism sector in Latin American and Caribbean countries has been one of the most affected by the pandemic because activities that include travel, entertainment, restaurants and bars, shopping, among others, involve high contact between people (ECLAC, 2020 ).

Tourism is not equally important for the economies and jobs of the countries of Latin America and the Caribbean, so the impact of the damages of the COVID-19 pandemic will vary according to the prevalence and its rate. According to the World Travel and Tourism Council (WTTC), the Caribbean region has the highest share of tourism in the world in terms of GDP and employment. Antigua and Barbuda, Bahamas, Grenada and Saint Vincent and the Grenadines are the group of countries with the highest share of tourism in GDP with more than 40%. At the other extreme are countries where the region produces less than 11% of GDP, such as Cuba, Haiti, Trinidad and Tobago. This weight is equivalent to that of some countries in Central and South America. By contrast, employment in the Caribbean is highly dependent on tourism: in eight of these countries, employment accounts for more than 30% of total employment. The case of Antigua and Barbuda stands out, which accounts for 90.7%, Saint Lucia 78.1%, Saint Kitts and Nevis 59.1% and the Bahamas 52.2%.

In Central America, Belize's tourism industry accounted for a much larger share of GDP and employment than countries in the geographic region, 37% and 39%, respectively, while elsewhere this share ranges from 6% to 16%. % of GDP and 7% up to 15% of total employment. In 2019, tourism and travel contributed 16% and 13% of Mexico's GDP and employment, respectively. Of the selected South American countries, Uruguay had the highest share of tourism in GDP and employment in 2019, with 16% of the two indicators, in Chile, 10% of GDP and the share of employment is 12%, for the rest of the region, the share in GDP is from 4% to 9% and employment from 5% to 10%.

Losses in the Caribbean are estimated at $26.5 billion. In which, the number of overnight tourists is 24.5 billion dollars, cruise ship tourists are 1.6 billion dollars and other tourists are around 300 million dollars. Losses are taken into account for air and sea traffic by private vessels to gradually open to tourist traffic and reopen cruise ships in December, with vaccinations at the beginning of the year between the loss. In fact, the Caribbean region is facing perhaps the worst disaster in recent history, directly affecting one of its key sectors, from which there is a direct and indirect link to the economy as a whole.

The Bahamas was expected to lose $2.299 billion in tourism, resulting in a 7.6% drop in GDP. This resulted in a wage loss of 2.9% of GDP, an operating surplus of 2.7% of GDP, and a loss of mixed income of 0.05% of GDP. In the Dominican Republic, tourism receipts were expected to decrease by $6.033 billion in 2020. The effect of this decrease is to reduce GDP by 4 percentage points. On the revenue front, the impact was reflected in a drop in wages, operating surplus and mixed profit of 1.9%, 1.6% and 1.3% of GDP, respectively.

In terms of jobs, all sectors of the economy lost 242,000 jobs, or 5% of the employed population. This includes jobs directly and indirectly related to tourism. Likewise, it has a strong gender impact since 56% of industry employees are women.

In Central America and Mexico, the loss in 2020 was about 30.1 billion dollars. Mexico, Panama and Costa Rica suffered the largest absolute losses. The average loss forecast is 78% of each country's originally expected tourism receipts, showing the extent of the impact. In 2020 it represented 2.2% of estimated nominal GDP for the entire year. As mentioned above, Belize is classified as the most vulnerable economy in the subregion, a small economy highly dependent on tourism, with a loss of 26.2% of GDP, followed by Panama with a loss of 6.5% of GDP.

Guatemala was estimated to lose $1.193 billion in tourism in 2020, resulting in a 0.7 percent drop in the country's economic activity. The drop in GDP caused wages, the operating surplus and mixed income to fall by 0.19%, 0.17% and 0.24% of GDP, respectively. In terms of jobs, we lost around 43,000 jobs or 0.6% of jobs in the country due to the downturn in the tourism industry. In Guatemala, the accommodation and catering sector alone employs more than 353,000 people, of whom almost 70% are women. Honduras lost $626 million in tourism revenue in 2020.

In Nicaragua, tourism lost income of $230 million, which reduced GDP by 0.7%. The drop in GDP translated into a drop in wages, operating surplus and mixed income of 0.22%, 0.17% and 0.37% of GDP, respectively. In Panama, the loss of tourism was about 4,289 million dollars, or 2.3% of GDP. 25,000 jobs, or 1.3% of the country's workforce, have been lost due to lower revenue from tourism. In Panama, the food and lodging industry employed some 114,000 people, of whom almost 60% are women.

Income from tourism in El Salvador decreased by $1,104 million, negatively affecting GDP by 1.6%. The drop in GDP will mean a drop in wages, the operating surplus and mixed income. Nominally, these losses are $125 million in damage, $158 million in operating surplus, and $118 million in mixed revenue.

In South America, the loss was $25,804 million, or 0.8% of GDP. Countries with the most developed tourism industries, such as Argentina, Colombia, Brazil and Peru, suffered the most. However, in relative terms, Bolivia was the most affected country, with a loss of 2.1% of GDP.

For Colombia, the drop in income from tourism was $5.7 billion, which represented a 1% drop in GDP. Along with the drop in tourist activity, labor wages fell by 3,908 million pesos, equivalent to 0.4 percentage points of GDP. The drop in production resulted in the loss of around 195,000 jobs or 1.2% of the employed population. Significant impact on women, who represent 68% of jobs in the hospitality and food industries.

The loss of the tourism industry in Peru was $3,939 million. This means that the GDP of the country's economy will decrease by 0.8%. It is estimated that the Peruvian economy has lost some 220,000 jobs, or 1.3% of the employed population, just because of the drop in tourism. The Peruvian economy is characterized by one of the highest percentages of women working in the hotel and food industry (74.8%). The high number of job losses associated with tourism has a disproportionate impact on women's employment.